lifepack (version 0.1.0)

equiv_premium: Equivalence Premium

Description

This function calculates the equivalence premium for an insurance contract.

Usage

equiv_premium(s, t, Lambda, R, dR, mu, r, n)

Value

A scalar

Arguments

s

Initial timepoint

t

End timepoint

Lambda

Intensity matrix

R

Reward matrix

dR

Differential of reward matrix

mu

Equivalence premium guess

r

Constant rate as a scalar

n

Number of steps for the Runge-Kutta algorithm

Examples

Lambda <- function(x) matrix(c(-0.1, 0.1, 0.05, -0.05), nrow = 2)
R <- function(x, mu) matrix(c(mu, 0, 0, mu), nrow = 2) # Corrected
dR <- function(x, mu) matrix(c(0.1, 0, 0, 0.1), nrow = 2)
equiv_premium(0, 80, Lambda, R, dR, 0.05, 0.03, 100)